For the second time in two decades, the Connecticut Bank & Trust Co. is dying a slow, lingering death. In both cases, it’s a Massachusetts bank that murdered it.
The original CBT was the Nutmeg State’s biggest bank when Bank of New England swallowed it in the late 1980s – only to see the whole shebang crumble into the hands of Terry Murray’s Fleet Financial Corp. Ten years ago, a number of CBT alumni started a new bank, gleefully resurrecting the venerable name. But in May, Pittsfield-based Berkshire Hills Bancorp bought Conn. Bank & Trust Co. The signs now say “Berkshire Bank – CBT Division.”
The CBT branding is unlikely to survive the winter, much like the name Beacon Federal Bancorp won’t be around much longer in New York State since Berkshire closed its acquisition of that lender last week. Berkshire’s now a $5.5 billion regional banking powerhouse, and for that it wants one name, one marketing plan, one bottom line.
Like Berkshire, Springfield’s United Bank is bulking up its regional presence. It closed this month on its acquisition of Windsor Locks, Conn.-based New England Bancshares, pushing it to $2.3 billion in assets.
It’s not hard to see why these banks want to expand their footprint. They are themselves beset by banks-on-steroids. Connecticut’s Peoples United Bank is peppered throughout New England after it bought Chittenden Bancorp a couple years ago. Webster Bank, also headquartered in Connecticut, has been expanding rapidly in Massachusetts. And First Niagara swept in last year from New York, picking up branches throughout southern New England that once belonged to New Alliance Bank.
Heck, it’s beginning to feel like the 1980s all over again. Except this time with sanity added to the mix.
Financials Come First
When the recession barreled into the Northeast then, community banks by the scores failed here in sympathy with a real estate market that was belly up. That allowed healthier banks – like Webster, which at the time was First Federal Savings & Loan of Waterbury – to gobble up bank road kill. Now the pickings are coming from banks that are overwhelmed by regulatory compliance costs, and are trying to operate in an environment that hasn’t been conducive to loan growth.
And yet, buyers for those community banks are scarce. Partly, it’s because this isn’t a climate where banks can sell at a premium. But there’s more at work than that.
The current spate of regional bank growth is curious. Some, such as the People’s United purchase of Chittenden, came about because of excess capital (about $2 billion worth, in this case) needing productive use. Webster’s drive is to spread its operating costs over as big a network as possible, in part to satisfy Warburg Pincus, which made a $115 million investment in the company in 2009.
What’s missing these days seems to be the ego-driven growth strategy. Banks aren’t bulking up simply because they’ve reached a certain asset size, and the CEO wants be lord of a bigger land. That’s what drove the growth of Shawmut National Corp., BankBoston Corp. and Bank of New England – all names that are now dust.
When the now $18 billion People’s United was a $4 billion institution, it was the largest in Connecticut. Now Middlesex Savings Bank is that size, and it seems content with slow, organic growth in the 30 communities it already serves. And Eastern Bank holds $8 billion in assets, but it seems to have no desire to grow its retail banking beyond its eastern Massachusetts footprint.
These banks aren’t looking for growth for growth’s sake. And they’re certainly not looking to buy at a premium. They’re also in vibrant economic communities, unlike the regions served by Berkshire and United.
When you’re a bank operating primarily in Western Massachusetts, finding new opportunities in more robust areas of New York, Connecticut and central Massachusetts seems like a good way to go. It’s great to be a community bank. But it’s even better to be a bank in a great community.
Vincent Michael Valvo is CEO of Agility Resources Group LLC. He can be reached atvvalvo@agilityresourcesgroup.com.
